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The Government have recently announced a package of measures to help Domestic Households across England, Wales & Scotland with rising Energy Costs through the Winter, but why don’t Businesses benefit?
What is the Temporary Targeted Energy Profits Levy (Windfall Tax)?
On Thursday 26th May 2022, the Chancellor Rishi Sunak introduced a “Temporary Targeted Energy Profits Levy” (Windfall Tax) on Energy Companies that produce Oil and Gas, due to an increase in demand and profits as the world emerges from the COVID19 Pandemic and the effects of Russia’s conflict with Ukraine.
Windfall Taxes are not overly common, and are primarily used to target businesses that were fortunate enough to benefit from events they were not responsible for, in effect, obtaining a windfall.
It is expected these measures will raise up to £5bn, and would see our nation fall in line with other European Countries who have announced Windfall Taxes on Energy Companies, including Spain and Italy.
What will the funds be used for?
The funds raised through the above scheme contribute to an overall package of measures totalling close to £15bn, of which will help homes in England, Scotland & Wales with rising Energy Bills heading into the Winter Season.
Expectations from OFGEM are for the Energy Price Cap to increase significantly to £2,800 in October 2022, following on from record rises, effective April 2022.
Why aren’t Businesses being protected against ongoing Energy Price rises?
Unfortunately these measures are only going to help Domestic Households, leaving Businesses exposed to ongoing price increases. Ofgem’s Energy Price Cap has never affected Commercial Energy Agreements, as prices are secured on the Live Wholesale Market.
The overall benefit of this ensures that any Commercial Energy Agreements secured, are based on live pricing, rather than when the Energy Price Cap is reviewed every 6 months. In a declining market this method is extremely beneficial, however in this current climate of Rising Costs, it unfortunately means prices can increase over Ofgem’s Energy Price Cap.
Unfortunately due to this method of pricing, there are no benefits to these measures for Businesses.
Is there anything Commercial Businesses can do to reduce ongoing costs?
CostAdvice – Energy Specialists are here to help, and we are on hand to offer a Full Energy Health Check on all of your current supplies & agreements.
Did you know that not all business energy contracts are the same?
Also, not all businesses should be charged the same costs.
Our health-check looks deeper than just looking at your rates.